Standard Chartered economists Jonathan Koh and Edward Lee are revising the path of the Bangko Sentral ng Pilipinas (BSP) interest rates, reducing expectations for an off-cycle 50 basis point hike ahead of its June 18 meeting. They continue to forecast an escalate of 50 basis points in June and 25 basis points in August as inflation risks remain and PHP weakness raises concerns about imported inflation. Policy easing is only expected from the second quarter of 2027.
BSP path corrected, but still hawkish
“We no longer expect the Bangko Sentral ng Pilipinas (BSP) to implement an off-cycle 50 basis point rate hike ahead of its scheduled June 18 monetary policy meeting.”
“That said, we maintain our call for a 50 basis point increase at the June meeting and then a further 25 basis point increase in August as inflation risks have reduced but not disappeared.”
“The continued depreciation of PHP also reinforces concerns about imported inflation and supports the BSP’s hawkish rhetoric.”
“As an off-cycle increase is no longer our benchmark, we are lowering our end-2026 interest rate forecast to 5.25% (from previously 5.75%).”
“We continue to expect a reversal of these increases from the second quarter of 2027 as inflation declines more convincingly, leading to the policy rate returning to 4.50% by the end of 2027.”
(This article was created with the aid of an artificial intelligence tool and has been reviewed by an editor.)
